- By Region
What’s the deal?
Mr & Mrs Smith, the boutique hotel guide and booking service, has launched a four-year bond offering a fixed return of 7.5 per cent, paid in half-yearly instalments. The bond has a target value of £5m and the minimum investment is £1,000, with no upper limit.
Is this good?
It is likely to prove popular with those seeking fixed income opportunities. It is also expected to appeal to regular users of Mr & Mrs Smith’s services because those bondholders who elect to receive their interest in “loyalty money” will be able to use this money towards booking at Mr & Mrs Smith’s 900 boutique hotels and houses around the world. This choice also boosts the investor’s return by 2 per cent, giving an annual rate of interest of 9.5 per cent.
What’s the catch?
Savers looking for inflation-beating returns should be aware that bonds carry a higher risk than savings deposit accounts. There is no protection from the Financial Services Compensation Scheme, so if the company goes bust, you will only get your money back if the company still exists in four years. Investors cannot cash in their bonds before the term expires, so it won’t be ideal for those seeking liquidity.
Finally, if you want to place your bonds in a self-select stocks and shares Individual Savings Account (Isa) or inside a self-invested personal pension, you may also face an annual account charge for doing so.
What’s the alternative?
Tesco Bank recently issued a new version of its retail bond, offering a coupon of 5 per cent until 2020, while a bond from Provident Financial Group, the doorstep lender, has a coupon of 7 per cent. Then there is also the 10-year inflation-linked bond from National Grid paying 1.25 per cent twice a year, adjusted for retail price index inflation.
How do I find out more?
Applications can be submitted until Wednesday June 27 via the website www.mrandmrssmith.com/bond.